California needs sunshine on rising drug prices

Sovaldi, a $1,000 per pill, has become a common treatment for Hepatitis C but insurers are reluctant to pay the higher costs.
Sovaldi, a $1,000 per pill, has become a common treatment for Hepatitis C but insurers are reluctant to pay the higher costs. Gilead Sciences via AP

The introduction of new and innovative drugs is vital to our health care system, but these often high-priced treatments come with challenges. The hepatitis C drug Sovaldi, priced at $84,000 for a regular course of treatment, is one of the most notable examples.

But the problem extends much further. A recent Reuters investigative report revealed that prices for four of the nation’s 10 most prescribed drugs more than doubled since 2011, adding billions in costs for consumers, employers and government health programs.

That’s why I’ve introduced Senate Bill 1010, which would require drug companies to give at least two months’ notice to state programs such Medi-Cal and CalPERS when prices increase by more than 10 percent and to give 30 days’ notice for new drugs priced higher than $10,000.

The bill, which will be heard by the Senate Health Committee on Wednesday, also provides consumers a greater understanding of prescription drug costs by requiring health plans to identify the specific drugs that are driving the most spending.

This trend is a costly burden on all of us, making it crucial that we understand what’s behind these exploding prices. The public and policymakers need greater insight that will allow us to identify strategies to ensure that prices do not threaten our ability to access life-saving treatments.

Transparency-focused policies, like those in the Affordable Care Act, have led to rules that require California hospitals to provide pricing information for common surgeries, health plans to submit detailed data on premium increases and doctors to report more information to the federal government. Drugmakers, however, have been able to escape this openness.

Available data suggest that publicly accessible price information in other sectors of the health care market encourages competition and reduces excess health spending. SB 1010 would bring prescription drugs in line by shedding light, for the first time, on those drugs that are having the greatest impact on our health care dollar. This change is absolutely necessary when more than 900 drugs have price tags at or above $10,000, and the release of new drugs often comes with record-breaking prices.

The impact of these costly new drugs on taxpayer resources is massive, with millions of Californians covered by Medi-Cal and other public programs. With the impact of rising premiums on employers, it’s common sense that we bring some transparency to these record-breaking prices.

That’s why groups including the California Labor Federation, AARP, California Medical Association, Health Access and Consumers Union joined me in the push to uncover the truth about high-priced drugs. The fact that we now compel people to purchase health care coverage creates a moral obligation that we do everything we can to ensure that coverage is affordable. This bill won’t be a magic bullet, but understanding the factors that are driving massive increases in pharmaceutical spending is a vital step to take.

Ed Hernandez, an Azusa Democrat, represents the 22nd state Senate District and is chairman of the Senate Health Committee. He can be contacted at